Question
Your clients would like to plan for their sons college education. They would like their son, who was born this year, to attend a public
Your clients would like to plan for their sons college education. They would like their son, who was born this year, to attend a public university for 4 years beginning at age 18. Tuition is currently $23,500 per year and has increased at an annual rate of 5.25%. They expect to earn an after-tax rate of return of 7.5%. They want to be able to pay 100% of the costs.
What amount must your clients have in their 529 account by the time their child starts college to fund their goal of paying 100% of college costs? (2.5 pts)
What annual savings amount is required by the clients to meet their education savings goal for their child (assuming they save at the end of each year)? (2.5 pts)
How much must your clients save at the end of each month if they would like to make the last payment at the beginning of their sons first year of college? (2.5 pts)
What amount would be required to deposit today to fully fund their education savings goal for their child so that they would require no more additional savings, assuming they have $1,000 saved today? (2.5 pts)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started